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Book review: ‘Dealing With China: An Insider Unmasks the New Economic Superpower,’ by Henry Paulson

(Summit Daily News) – For most people, the name Henry Paulson conjures up images of Sunday morning talk shows during the financial crisis of 2008, or of the former U.S. Treasury Secretary’s tidy scrawl across the bottom of a $20 bill. But, to a significant number of Summit County locals, “Hank” Paulson is a friend from the early days, a familiar sight alongside his wife, Wendy, at holiday family gatherings or on his favorite hiking trails and ski slopes.

In recent years, Paulson has authored two books, adding to his already weighty résumé. “On the Brink” details the intense months as Treasury Secretary during this nation’s most recent and devastating economic downturn, and his latest book, “Dealing With China: An Insider Unmasks the New Economic Superpower” discusses, in great detail, the importance of maintaining a lively and evolving relationship with China. There is some overlap between the two, as “Dealing With China” follows Paulson’s decades-long, transformative relationship with the world’s largest, and arguably most complex, nation, touching on periods in his life before, during and after his stint as part of the Bush White House team.

What quickly becomes clear upon reading “Dealing With China” is Paulson’s deep fascination with the nation and his profound determination that the United States get things right in how it moves forward with what will undoubtedly become the next great superpower. “Today’s China is a land of superlatives.” Everything about it is the biggest, the fastest, the longest — a juggernaut nation on the rise. But, Paulson insists that it is also a country very well aware of its own shortcomings, and it would do our own nation good to be mindful of both China’s strengths and weaknesses.

Paulson’s book steps back in time, well before China was the confident economic giant of today, to the country’s earliest attempts at reform. Paulson recounts his first visit to China, in 1997, as a banker with Goldman Sachs, shortly after the death of the nation’s leader, Deng Xiaoping, who had been the chief architect of the wave of changes sweeping the Asian country. There was great concern in the West as to how the transfer of power would impact the positive momentum China seemed to be experiencing, as it reformed some of its more outdated Communist ways.

In a very clear and engaging fashion, Paulson delves into the long and arduous history of negotiations between Goldman Sachs and Chinese officials regarding the establishment of modern telecommunications and banking systems for China, all while helping the country stay within the framework of its “socialist market economy.” China was well aware that it could learn a great deal from modern American business practices, acknowledging the need for more regulation and transparency if it hoped to deal on the world economic stage.

From Paulson’s first visit forward, the changes he witnessed were staggering, and he viewed China as worthy of the world’s support, even in its earliest days of reform, partly because the potential for payoff to investors (Goldman Sachs being one) was so significant. China, he knew, faced an enormous learning curve, tackling basic economics and banking concepts from square one. They proved to be eager students, as a realization seemed to have hit that a strong economic base was imperative in an increasingly global world. China also seemed to understand the benefits of some levels of privatization, though its officials preferred to speak in terms of “corporatizing” or “capital restructuring” rather than privatizing, as it fit better with their “socialism with Chinese characteristics” model.

Paulson shows the depth of his relationship with China, as he takes the reader through the decades of reform, step by step, including the country’s challenges with its currency and the roadblocks and setbacks that have risen because of lightning-fast changes. He is quick to point out that China displayed a steady hand when the West teetered on the brink of collapse, staying calm and attentive to what the United States needed to remain strong. The Chinese have shown themselves to be ready to play on an equal footing in the big leagues.

The one area where China is failing to lead, and the one area closest to Paulson’s heart, is the environment. China is woefully unprepared to deal with the immense challenges that seem destined to arise due to climate change, but he offers many examples of their deepening commitment to making the necessary efforts. The Paulson Institute, the result of Paulson’s desire to focus his energies and talents on his passion for nature and conservation, grew out of his concern for the shared path that the United States and China will need to navigate together to solve the climate crisis.

Maintaining the bonds that have grown over decades of careful and thoughtful diplomacy and interactions is vital, Paulson says, for a strong relationship with China will benefit all sides and show a unified presence against less stable nations, including Russia. Paulson sees his own years of experience as an opportunity for progress, and he envisions the future of the Paulson Institute as a “think and do tank,” destined to promote real change based on cooperation and mutual respect.